This is not an accident. It’s a result of deliberate policy choices. The incumbent homeowners voted themselves massive returns. And they felt self righteous while they were doing it to boot.
We'll see. They're millionaires on paper. If there's one thing about unsophisticated people and investments, they always cash out when it's too late.
There is no such thing as "too late" in urban housing. Rural areas are so far "left behind" that it will take about ten times the investment that Biden wants to put up to bring it to civilized level, and he's already getting massive resistance... no way that the rural flight trend will be reversed.
Go ahead and buy some homes for investment! Go buy some Dogecoin! Some GME! What a low information take, to say something about rural homes and Biden or whatever.
In the service of curiosity: maybe if you sold your $185,000 home from 1986 for $1.5m today, you’ll walk away a millionaire. A lot of people are looking at that arithmetic in San Francisco. And yet they do not sell! The index for months on market is at record lows. What’s going to really happen? They will watch the market fall, and then say to themselves “guess I should just wait until it goes back up in 10 years.”
The market won't fall, that is the entire point. It reasonably cannot fall, since the only politics that could make it fall (buildout of rural infrastructure, overriding NIMBY shit) won't ever pass. Inertia is massive.
If interest rates rise in the next 10 years then I suspect many will be left with mortgage payments they can't afford.
Sure, but there will always be a bigger (Chinese) fish to eat you(r investment). If there is one thing this world does not lack, it's a bunch of individuals and investment funds looking to make money on rent.
> The market won't fall, that is the entire point. It reasonably cannot fall, since the only politics that could make it fall (buildout of rural infrastructure, overriding NIMBY shit) won't ever pass. Inertia is massive.
That's probably overoptimistic. There are political circumstances that could cause metropolitan property values to fall on annual or even decadal timescales.
Consider, for example, the possibility of policies that have the effect of curtailing real estate investment by those exfiltrating funds from various regimes.
Or policies that made every school a good school, ending the (sometimes huge) price premium homes in 'good' school districts get.
If the percentage of renters continues to grow (and property ownership keeps concentrating), you could see that math get flipped on its head (though there is an intermediate stage where 'likely to donate' outweighs 'likely to vote' to keep things as they are).
There are other possible policy scenarios, though. Sane densification of suburbia for example seems more likely than massive rural infra buildout.
As interest rates begin to climb, house prices shall fall. If inflation forces banks to rapidly increase interest rates, house prices will crash.
If you sell your primary home out of greed, assuming you otherwise like living there, you are attempting to time the market.
That never ends well.
Another thing that never works is trying to talk sense on the internet.
> If you sell your primary home out of greed, assuming you otherwise like living there, you are attempting to time the market.
Very well said. A home is not a stock to trade, trying to time the market. The point of a home is to live in it. Maybe sell in retirement to downsize. The estimated value fluctuations in the middle decades are not relevant to the homeowner.
That's because a home is a place to live. Except for house flippers, nobody is watching the prices as if it were a stock symbol looking for an exit point.
It's a home, purpose is to live there.
This is a popular meme in these threads, but could you be more specific to back that up?
In >20 years owning a home, it has never come up that I've been asked to vote on anything related to giving me any returns. Where are these votes happening?
1) the minimum wage doesn't get increased with inflation
2) many jobs require a higher degree (which takes capital to pay for), or effectively require working for free via internships (which requires capital or someone else subsidizing you)
3) many higher paying jobs preclude you from working there if you have a criminal history (which is very disproportionately likely to be true for some demographics than others, in many cases just due to disparate enforcement), which effectively suppresses wages for many millions of people.
On the housing side, any policy that restricts the building of new housing in order to limit supply (and there are a lot of them) will drive up housing prices. This includes things like minimum lot sizes, enforced parking requirements, etc. It's pretty much universally accepted in the US for local politicians to talk about 'protecting home values', which usually has a subtext of [by keeping poor people out of our town]. This is probably the _most_ common policy topic in my well-off suburban community - every proposal for multi-family housing gets fought tooth and nail, it's virtually impossible to build more than 1-bedroom apartments 'lest our schools become overcrowded [by poor people]', etc.
You don't just go from 0 to a house. There is usually about a year of designing/planning which have to be approved and meet national and local code, numerous inspections, approvals and permits before ground is broken. Most people who move buy an existing house because they want to move "now." Out of all of the places you've lived, how many did you have custom built vs moving into an existing structure?
Prices are rising pretty quick in Arizona and Idaho as well. Idaho was the quickest growing state in 2020[2]. Those are also hotbeds of people moving to them. Most are trying to escape California, Chicago and NY. CA and NY lost population and even recently had their US House seats reduced as a result[3].
[1] https://fortune.com/2021/04/27/lumber-prices-are-up-232-and-...
[2] https://www.kxly.com/idaho-leads-country-with-amount-of-peop...
[3] https://www.usatoday.com/in-depth/news/politics/elections/20...
1) Prices have gone up, but not nearly as much as places where supply is much more constrained (i.e. the bay area or NYC metro area).
2) Even if there is 'unlimited land', the land closest to the city centers where most of the employment is located is still limited. A cheaper house 3 hours away from your job doesn't help someone all that much.
3) Texas absolutely has lots of policies that do things like limit housing density. Many of the huge suburban tracts being developed have home owner's associations that enforce a variety of policies like the ones discussed earlier (enforce uniformity in terms of lot size, minimum house size, parking, etc), as well as limiting your ability to do things like rent or subdivide your property
4) You just need the population to be increasing faster than the housing supply to have a 'supply issue'. This last year has both seen a lot of raw material supply issues (and labor issues) due to the pandemic, and a lot of people also trying to relocate (also due to the pandemic). Sometimes temporary housing prices increases are unavoidable while supply and demand adjust, but long term policy decisions can definitely limit supply and force prices higher.
Another commenter also pointed out that low federal interest rates generally promote asset price inflation (as buyers are frequently bidding based on their ability to carry a 30-year monthly mortgage payment, so lower interest rates can almost directly increase home values when people are bidding against each other).
Sure it does. It's pretty much unchanged since 1980 (in a sawtooth, they build up some pressure due to inflation and then it jumps up due to legislation).
1960-1980 looks to average around 20% higher.
It's funny how these charts differ.
https://www.pewresearch.org/fact-tank/2017/01/04/5-facts-abo...
https://image.cnbcfm.com/api/v1/image/103807392-min-wage-inf...
A strong argument can be made that minimum wage should track GDP, not inflation.
It took me a long time to grasp this because I simply refused to believe that people think this way. Just think about what "character of the neighborhood" really means.
It may sound like it is about architecture and preserving history but the character of a neighborhood isn't made up by that alone, the biggest factor in the character of the neighborhood are the people living in it and therefore preserving it requires keeping certain people out. It really is a code word for classism.
Every time interest rates are lowered, land prices go up, because the monthly (financial) rent remains the same. Similarly with down payments (20% -> 5%). The next step will be lengthening mortgage terms past 30 years. Each of these steps is aimed at making it more affordable to buy a house, but economic feedback makes sure that is only temporary. Meanwhile as asset valuations go up, one's ability to ever pay off that mortgage goes down.
Given enough inflation, interest rates will go up and then we can start getting rid of zombie companies, increase productivity growth and have growing wages again.
But that seems to be politically impossible. So another way to approach it would be to drastically reduce the legal definition of full time work. It should be under 20 hours already, considering that women entering the workforce nearly doubled overall hours worked. But instead, all of that overproduction got dumped into the hedonic treadmill and bullshit jobs.